World

Egypt's tax hike on wealthy to last three years

CAIRO (Reuters) - A new 5 percent surtax on the incomes of wealthy Egyptians will last for three years, the finance minister said on Saturday, less than three weeks before the country elects a new president.

Hany Dimian said the tax, approved by the cabinet last week, would apply to those earning more than one million Egyptian pounds (84,200 pounds) annually in 2014, 2015 and 2016. He said the first payment would be due in January 2015.

Those subject to the tax would be given the choice of whether their funds should go towards public projects in education, health, agriculture, housing or infrastructure.

The temporary tax had been under discussion for several months, but its approval comes shortly before a May 26-27 presidential election which is widely expected to be won by former army chief Abdel Fattah al-Sisi.

The measure still needs to be passed by Interim President Adly Mansour before it can be implemented.

Social justice and fairer distribution of wealth were among the demands of protesters who ousted veteran president Hosni Mubarak in Egypt's 2011 Arab Spring revolution. Elected Islamist president Mohamed Mursi was removed by the army last year in the wake of mass protests.

The turmoil has hammered the economy, driving away foreign investors and tourists.

The country of 85 million has been struggling to curb a budget deficit that swelled to around 14 percent of gross domestic product last year. It is under pressure to cut subsidies that eat up around a fifth of its budget, but risks triggering protests if it does so.

In a television interview this week, Sisi said energy subsidies could not be lifted quickly and insisted he would intervene to protect the poor from rising prices. But he did not spell out details of how he would manage the economy of the largest Arab state.